One thing I have learned in my work with the Liberty Movement over the years, a fact which I will never again take for granted, is that the world can turn on a dime, without warning, or pity. We often expect that these drastic changes will be for the worse, but now I realize that this is not always so. A dramatic turn towards good, a turn towards truth, is just as possible as any other, as long as we endeavor to make it so.

Not long ago, only a couple years back, the idea of finally achieving a full audit of the privately controlled Federal Reserve was thought by many to be a naïve fantasy. The Fed was a massive internationally coordinated entity with unlimited resources (they print their own capital from thin air), how could we possibly compete with the political clout or the tremendous media sway they held at their fingertips? The masses had absolutely no inkling of what the Fed was let alone why they should care about its stranglehold on U.S. politics or financial mechanics. We were screaming at the proverbial “brick wall.” An economic collapse was imminent, and all we could do was wait.

Proponents of the Fed scoured internet chat boards and forums arguing that the Central Bank was part of the Government, that it was public, that it was audited yearly. The bigger the lie, the more effective it was in distracting people from the obvious and documented facts. But again, the world can turn on a dime…

The Federal Reserve Exposed!

It took a deflationary meltdown in credit and housing markets to finally inspire the average American to take an interest in the Fed, but the necessary curiosity and the subsequent and understandable rage over the so far unaccountable financial monstrosity has now taken hold.

The destructive interest rate policies that caused the Housing bubble and the derivatives bubble have now been exposed. The Fed kept interest rates in housing markets artificially low during the 90’s, primarily because the U.S. economy was already showing signs of deflation due to the continuous devaluation of the U.S. Dollar since 1913 and the exportation of America’s manufacturing base. Central Bankers stepped in, and the cheap money which followed created the so called “sub-prime” mortgage boom, which prolonged the effects of a collapse through easy credit, but also lured millions of people into crushing debt.

As sub-prime mortgages timed out and their low introductory rates expired, American homeowners suckered by the rain of cheap loans were suddenly confronted with payments they could not possibly afford. Many of these sub-prime mortgage rates expired, strangely, in a very short span of time, which then led to massive and simultaneous bankruptcies, the bubble collapse, and the panic in derivatives markets, which are invested heavily in debt based securities.

What people must realize is that the economic meltdown we are witnessing today is not a sudden and unpredictable event, but an easily foreseeable chain reaction that took decades to coalesce. Numerous people, including men like Ron Paul and Peter Schiff, predicted the collapse years in advance:

Instead of investigating the Federal Reserve and its role in the collapse with a full audit, the government instead opened the door for the Central Bank to create an even larger and more devastating bubble in the Dollar by passing the Banker Bailout Bills.

The validity of the banker bailouts (which the vast majority of Americans did not want) have now been consistently challenged in the House. The arbitrary $700 Billion number given to Americans when the bailouts were being organized has been revealed as fraudulent. The Fed is completely unrestrained and able to print fiat capital at will. The real estimate for the size of the Banker Bailouts comes to around $24 Trillion!

This act alone warrants heavy handed scrutiny of the Fed. But how is it possible that the Fed can take and spend taxpayer money without any oversight? For decades the Fed has argued that they are a “part of the government”, but their recent actions bring the truth to the surface. The Fed is in fact not public, but a private entity not subject to FOIA requests or Congressional oversight (Congress has the right to pursue a full audit of the Fed, but this right has not been exercised until now). This is the ONLY reason why they can refuse to tell Congress where our money has gone. Finally, Alan Greenspan himself was forced to admit that the Fed is “independent” (private), and answers to no one:

Today, the Fed along with spokesman/PR-man Ben Bernanke are desperately trying to maintain damage control on the Central Bank’s public image. Ron Paul’s HR.1207 has been hugely successful and a vote on the bill appears to be unstoppable. The bill presents Fed officials with their most dreaded of all scenarios: an audit!

But why do Central Bankers need to be dragged kicking and screaming into an audit? What are they so afraid of? First, let’s examine some of the Fed’s primary arguments against an audit, and why all of them are absurd…

The Fed’s Arguments Against Audit

False Argument #1: The Fed must remain independent or it will come under political pressure and will not be able to do its job.

This argument is summed up quite well in the following quote from Anil Kashyup, an economist for the Board of Governors of the Federal Reserve:

“Economic theory and massive amounts of empirical evidence make a strong case for maintaining the Fed’s independence. When central banks are subjected to political pressure, authorities often pursue excessively expansionary monetary policy in order to lower unemployment in the short run. This produces higher inflation and higher interest rates without lowering unemployment in the long term. This has happened over and over again in the past, not only in the United States but in many other countries throughout the world.

The Fed’s independence is critical to its credibility. During the financial crisis, this credibility allowed the Fed to take extraordinary action to prevent a possible depression without triggering inflation. But eventually the Fed will have to scale back its unprecedented monetary accommodation. When it does move to tighten monetary conditions, it must be allowed to do so without political interference.”

I find this argument fascinatingly ironic for a couple of reasons. First, Anil makes no reference to what “empirical evidence” he is referring to. At what point has the Fed ever been subjected to “political pressure” which resulted in inflation it did not want, and who then studied and compiled data on this event that no one has ever heard of? It would certainly be sporting of Mr. Kashyup to at least cite where he is getting this evidence from.

Second, why is an audit of the Fed being equated with “political pressure”? An audit of the private Central Bank does not necessarily lead to political influences. It is a compiling of accounts. It is an examination of how much of our money the Fed has spent and where they spent it. It is not about telling the Fed how it should form and enact its policies. Mr. Kashyup’s argument is erroneous because there is no connection at all between examining the Fed’s accounts and controlling how the Fed operates… unless, of course, the Fed has been lying about its accounts, or has been involved in criminal activities. In that event, political pressure is not only warranted, but necessary to protect the interests of the American people.

Another point to consider: the Federal Reserve may be “independent” of the political motivations of Congress, but is it independent of the political motivations of the globalist bankers who run it? If it is not, then it would certainly be better for the Fed to be controlled by a Congress with an “agenda” who answer to the public, instead of a consortium of rich elites with an agenda who answer to no one.

Third, Kashyup presents these supposed consequences of an audit like some phantasmal bogey man, but the fact is, every item he warns about is already being caused by the Fed without any political pressure at all. The Fed on its own recognizance has inflated the money supply so much so that it deliberately stopped reporting its M3 measurement, which records among other things how many U.S. Dollars are held by foreign banks and the true level of inflation in the money supply:

The Fed has created this inflation while doing nothing to substantially stop unemployment levels from rising to between 17% and 18% (counting U-6 measurements). The Fed has attempted to claim that the recent decline in job losses is due to their bailout efforts along with the lowering of interest rates to near zero. However, it has been revealed that most of the fiat money printed out of thin air and flooded into large banks was not spent on balancing credit markets so that Americans could get loans, nor was it spent to create new jobs. In fact, banks that received trillions of dollars in taxpayer funds have either hoarded the cash, or bet it on stocks, propping up the Dow and creating an illusory “recovery” in the markets:

Money sitting idle in the coffers of corporate banking entities is not going to help create jobs, nor is printing money out of thin air a solid foundation for stopping job loss. It is much more likely that unemployment has leveled off on its own, until the next bubble collapse, and the next wave of layoffs.

So, all the terrible things Mr. Kashyup warns will happen if we audit the Fed are already happening. Yet, he still claims the current relationship between the Fed and the American people is fine the way it is?

A private group of bankers controlling the money supply of an entire country without accountability or transparency? Is this “reasonable” under any circumstance? I think not…..

False Argument #2: If the Fed were audited, it would ruin the economy’s chance at “recovery”, and the collapse would spiral out of control.

Federal Reserve Chairman Ben Bernanke said on Friday congressional proposals to audit the Fed and strip it of regulatory powers as part of post-crisis reforms could damage prospects for economic and financial health in the future.

“These measures are very much out of step with the global consensus on the appropriate role of central banks, and they would seriously impair the prospects for economic and financial stability in the United States,” Bernanke wrote in a column posted on the Washington Post’s website.

This appears to be more scare mongering, reminiscent of the threats the Fed made when American’s opposed the Banker Bailouts, however, in this case, the threat is probably real, and in a sense, comical. Why? Because in making this statement, Bernanke is basically admitting that if the Fed is audited, we will find something terrible, and when we do, all hell will break loose.

This argument is made to look as though it is based on financial concerns, but it is really a philosophical debate.

Should American’s be allowed to know the whole truth of their economic situation, thereby opening the door to anger and civil unrest? Or, should they go on believing naively that tomorrow will be exactly the same as today, and that all is well?

The fact that Bernanke fears an audit plainly spells out the reality that all is not well. If the Fed’s operations were sound and the economy is on a legitimate track towards recovery, then Bernanke should have nothing to fear from an audit. However, he states openly that he has much to fear, and so apparently do we.

The truth is its own reason, its own purpose. It drives forward with or without us. We can either embrace it, or neglect it, and eventually be destroyed by our lack of knowledge.

Will an audit of the Federal Reserve cause negative effects in the markets? Absolutely! If we find that even half of what we suspect about the Fed’s balance sheet is true, then the effects on the health of the economy and most especially the Dollar will be nightmarish. There is no mistake. The problem is, such events are going to occur regardless of a Fed audit, just over a greater period of time.

So, is it better to experience a collapse knowing exactly who is responsible and why? Or, is it better to experience a collapse in total ignorance of the facts?

The so called recovery is a sham, as we have covered and outlined in numerous articles:

Bernanke is simply stalling the inevitable fall of the Dollar bubble, just as Greenspan stalled the inevitable fall of the housing bubble. The sooner a collapse occurs, the less time it will take to sort out and restructure the economy. The longer these events are delayed, the bigger the bubble becomes, and the more catastrophic the breakdown will be when it finally happens. But perhaps, this is what the Fed has wanted all along…

False Argument #3: The Federal Reserve is necessary.

The Fed was founded in 1913 under dubious and subversive circumstances. Its purpose has been to centralize financial control of the U.S. into the hands of a small group of men. During its existence, we have suffered the Great Depression, many recessions, and now the “Great Recession” which will probably turn out to be the worst depression in the history of the world. The Dollar has been removed entirely from the gold standard which once gave our currency strength and stability. Subsequently, the Fed has been able to inflate our currency into oblivion. For instance, in 1913, if you bought an item for $20, that same item would now cost you $436. That is a rate of inflation of over 2000%!

The rate of inflation has only increased exponentially for every year that passes, and this does not even take into account the trillions of dollars now flooding into our economic system due to the recent bailouts. If this trend continues, the Dollar, the reserve currency of the world, will devalue to the point that no country will want to invest in it, or trade in it. This would not mean total failure by itself if other countries also inflated their currencies, but very few countries in history have ever printed fiat money at the level we are now while at the same time amassing a projected $9.2 Trillion national deficit. This combination of circumstances, all facilitated by the Fed, will cause the international dumping of T-Bonds, the collapse of the dollar, and thus, the default of the U.S. Treasury, which now relies on foreign credit just to keep our government, our military, and all other public services running.

If the Fed was designed to somehow protect the stability of the American economy as Central Bankers assert, it has so far failed miserably.

Before the formation of the Fed, it was the Treasury itself that coined money and determined interest rates. The Treasury is an actual part of the government, and is therefore accountable to the people, unlike the Federal Reserve. Most of America’s greatest economic achievements were made during the time before the Fed was founded. We lived, worked, and progressed as a society, all without a permanent private Central Bank.

So, is the Fed really necessary? The truth is we are much better off without it.

Demand An Audit Of The Fed

The House Financial Services Committee recently voted 41-28 to approve the amendments presented by Ron Paul to audit the Fed. Paul’s bill is now ready for a full House Vote:

This kind of consensus cannot be ignored, if only because to do so would create a groundswell of anger financial elites could not control.

The Fed directly determines the course of the economy, and so far it seems only for ill. In turn, this affects the livelihood of every citizen in this country. As long as America is a Democratic Republic, we the people have the right to know what they are doing and why at all times. Ironically, the Fed is attempting to appeal to the American sense of individual sovereignty (which they are attempting to destroy), but Governments and corporate institutions like Central Banks have no right to privacy when they are given the power to possibly disrupt the destinies of millions. The Fed’s concerns over their “independence” are ultimately irrelevant. They are secondary to the concerns of the American people, and the people have loudly and clearly spoken; it is time to know the truth. The gains far outweigh the costs. One way or another, the Fed will answer to us.

“There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”